S. Korea remains on U.S. list of countries to monitor for currency practices

May 29, 2019
The U.S. Department of the Treasury in Washington (Yonhap)

The U.S. Department of the Treasury in Washington (Yonhap)

WASHINGTON, May 28 (Yonhap) — The U.S. Treasury Department on Tuesday kept South Korea on a list of countries to monitor for currency practices but indicated its possible removal in the next reporting period.

The list was revealed in a semiannual report to Congress that also named eight other trading partners as countries warranting attention to their currency practices.

The others are China, Japan, Germany, Italy, Ireland, Singapore, Malaysia and Vietnam.

The Treasury said South Korea met only one of the three criteria for a currency manipulator and could be removed from the monitoring list if it remains so in the next six-month period.

“Given that Korea now only meets one of the three criteria from the 2015 Act, Treasury would remove Korea from the Monitoring List if this remains the case at the time of its next Report,” it said. “Korea must demonstrate that improvements against the criteria are durable before it will be removed from the Monitoring List.”

Under a revised set of criteria, a trading partner is labeled a currency manipulator if it has a bilateral trade surplus with the U.S. of at least US$20 billion, a current account surplus of at least 2 percent of gross domestic product and “persistent, one-sided intervention” in foreign exchange markets.

In the current report, South Korea met only one condition — a material current account surplus of 4.7 percent of GDP in 2018.

The Treasury also said South Korea’s trade surplus with the U.S. continued to trend down to $18 billion last year, the first time it has fallen below $20 billion since 2013.

It welcomed South Korea’s first public report in March on its foreign exchange intervention, calling it an “important development” in the country’s foreign exchange practices.

South Korea’s financial authorities sold $187 million in the second half of 2018 to help stabilize the market, the Bank of Korea said in March.

Seoul is scheduled to make public its second report in late September on its foreign exchange intervention during the first half of 2019, according to the Ministry of Economy and Finance.

Last week, South Korean finance minister Hong Nam-ki hinted that Seoul could intervene in its foreign exchange market in case of increased volatility over an excessive one-sided movement.

The Korean won had lost some 6 percent against the greenback the U.S. dollar as of last Thursday.